Shale gas revolution will see US become largest oil producer
The International Energy Agency has called America's shale energy revolution a "game changer," and said that it will be a major factor in the Unites States becoming the worlds largest oil producer over the next five years.
The 2013 medium-term oil market report evaluates the impact of changes to the oil market up to the year 2018. The time horizon of a five year forecast is intended to cover developments over the typical investment cycle. The report also cites "crude quality, infrastructure requirements, current regulations, and the potential for replication elsewhere" as contributing factors to the rapid changes in the global oil supply chain.
The report is in line with similar estimates, such as those of the US Energy Agency Information, which recently forecast that the US will become the largest producer of petroleum products and natural gas hydrocarbons 2013. Shale oil reserves are currently estimated at 58bn barrels, up from 32bn in 2011.
The energy revolution in the US has provided much needed growth in the stagnant economy. Gas prices in America have halved, hundreds of thousands of jobs have been created, and shale has been estimated to have added one per cent to GDP.
The report found that increased US production will lead to non-OPEC supply reaching an average of 1.7m barrels per day in 2014 per day. The increased production has lead to the stabilisation of oil prices which the agency says could have risen to $110 per barrel.
North America will lead medium-term supply growth while the report sees the East-of-Suez region as leading on the demand side. Non-OECD demand is also set to overtake OECD demand for the first time, non-OECD countries already make up half of refining capacity which is set to only expand further in the coming years.
Europe has been less keen to embrace shale gas with strong opposition from environmental groups and regulators. The coalition government in the UK has appeared more open to a greater role for shale in the UK's energy mix. There has been strong pressure from business groups for the government to support the industry.
The Institute of Directors estimates that shale gas investment could be peak at £3.7bn per year and create 74,000 jobs. An ICM poll showed 44 per cent of Britons believed the country should drill for shale gas while only 26 per cent opposed.